Indian Budget is one of the most imperative parts of the country’s administration because it ensures the systematic revenue for government which is used in economic growth by carrying out several activities, transactions and projects. As usual, new budget is prepared every year in order to suit the present condition of the country. Tax plays a vital role in every year’s budget. Rates of different types of taxes keep on fluctuating almost every year because it is an important measure to control governmental policies. New taxation system or amended taxation system and rates are implemented every year. Hence, new budget has been presented by the present Finance Minister of India, P. Chidambaram and many surprising policies have been noticed, one of which is service tax on restaurants.

According to the new budget, service tax has been extended to all restaurants that are air-conditioned. The budget has not yet clarified whether it is limited only to high-end restaurants or it has been implemented to all air-conditioned food centers including mess, canteen, eating joint and moderate restaurants. However, experts and economists predict that it has been extended only to high-end restaurants that provide tremendous numbers of services to its customers. Some experts have backed their statement by stating that service is hardly present in case of takeaways and home deliveries so service tax should not be charged in such places and will only be limited to high class restaurants that offer several beverages including alcoholic drinks. Small and local eateries do not offer many services to its customers so service tax should not be charged to customers who buy food from such places.

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However, if the service tax will be extended to all air-conditioned restaurants, people will have to pay more not just when eating in an air-conditioned restaurant but also when they order for home deliveries at their doorsteps. Adding to it, service tax will be charged when buying hot-dogs to eat in car or while eating in office canteen. Hence, customers will have to pay for home delivered pizzas, popcorn in theatre outlets and ice-cream in self-service outlets. If this happens, customers will cut down consumption of such foods and beverages upto certain extent and this will affect every firm’s sales for sure. Previously, service tax was restricted to air-conditioned restaurants serving alcoholic drinks but the amended service tax plan stated in Budget 2013-14 has created an atmosphere of confusion among customers.

President of the National Restaurant Association of India (NRAI), Samir Kukreja stated that the issue is being discussed by the officials of industry and they are looking forward to discuss it with finance ministry because service tax will increase cost of every food and beverage which will ultimately result in decrease in demand. Kukreja has requested finance ministry to implement the tax in slabs and set takeaways free from it as no service is involved in such form of mini-restaurants. While the matter is being discussed, one of the most popular franchises, McDonalds, has opted to impose tax although it has takeaways option also. It is being noticed that industries don’t want to take chances so consumers may need to pay more as the result of this mystification.

Article Contributed by – Less My Tax

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0 responses to “Imposed Service tax on AC-restaurants creates confusion”

  1. YELLAPPA REDDY says:

    IT HAD HAPPENED ME TO BUY PITZZA IN DOMINION SHOP AND IT WAS TAKE AWAY. I HAD PAID THE BILL AMOUNT. BUT FORTUNATELY IT HAPPENED ME TO SEE THE BILL SITTING ON THE CHAIR BUT THEY HAVE COLLECTED THE SERVICE TAX OF RS. 10. I WENT AND ASKED THE MANAGER, BOSS, WHY DID YOU LEVY SERVICE TAX FOR PARCEL, HE ANSWERED NO THERE IS SERVICE TAX AC RESTAURANT, THEN I QUESTIONED HIM, WHAT TYPE OF DO U PROVIDED ME I MEAN TO SAY SERVICE YOU HAVE PROVIDED ME TO CHARGE SERVICE TAX, I HAVE NOT ENJOYED YOUR AC NOR YOUR SERVICE. UNDER THE CIRCUMSTANCES, I TOLD HIM TO PAY BACK SERVICE TAX AMOUNT OTHERWISE I WILL MOVE TO THE COURT. AFTER 10 MINUTES HE HAD RETURNED THE SERVICE TAX AMOUNT.

    I WANT TO ENLIGHTEN U THAT ANY PARCEL OR CARRY OUT OF FOODS SERVICE TAX SHOULD NOT BE LEVIED

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